SHORTSALES

Diana Balazs: Short Sale Negotiator

Diana Balazs, our professional Short Sale Negotiator, stands apart with her depth of knowledge and expertise, plus her 13 years in the real estate industry. Short sale clients come to realize very quickly the amount of patience and dedication required to work though this type of transaction, and Diana is well known in the industry for her complete understanding of the process, her ability to “read” each situation properly, and her unequivocal respect and consideration for each and every client.

Diana brings with her nine years of short sale processing and negotiation; she moved from New York to Sarasota in 2001 and received her education at the Crown Business Institute in Brooklyn Heights, NY.

Some things to consider when Diana is negotiating your short sale:

  • She will not let you close without a Waiver of Deficiency from the Lender
  • On your Homestead Property, she will do everything possible to secure relocation assistance from the Lender
  • Nothing ever comes out of pocket from the Seller
  • Any IRS lien will be negotiated to get it removed from the property
  • Full support provided to gather all documents required to prepare a full packet for the Lender

Please use our contact page for any inquiries regarding a short sale transaction.


Let’s talk about short sales!

One ugly downside to the recent downturn in the housing market (which, to be fair, is much better today) was the record level of short sales throughout the country, in Florida in particular. If you’re buying or selling a short sale, there are a lot of hoops to jump through. It’s wise to know what you’re getting into before you take the first step.

Short Sale—The Lender

In a short sale, the lender agrees to accept a mortgage payoff amount that is less than the balance owed. Typically, the lender forgives the remaining balance.

A lender will not consider a short sale if:

  • The loan is current – If the homeowner is making regular payments, the lender has no reason to think he can’t continue making them. Usually, a notice of default must be issued in order for the lender to consider a short sale request.
  • The homeowner declares bankruptcy – Negotiating a short sale is considered a collection activity, which is not allowed in bankruptcy.

The only benefit to the lender is that a short sale is faster and less expensive than a foreclosure. Once it is clear that foreclosure is unavoidable, a lender is more likely to approve a short sale request.

Short Sale—The Homeowner

If a homeowner is considering a short sale, times are tough. They’re about to lose their home without a profit. And, they must endure the emotional stress of convincing the lender to allow them to do it.

Throughout the process, the homeowner’s focus is convincing the lender that a short sale is the best option.

  • A homeowner must prove that he will not be able to bring the mortgage current, and that there are no assets—cash, savings, investment accounts, etc.—that can be used to catch up.
  • The homeowner must also prove that the local housing market is so depressed that the home won’t sell for enough to pay the mortgage.
  • Most lenders will require a signed contract with a buyer to consider a short sale.
  • The homeowner must make sure the short sale agreement includes a waiver of the lender’s right to pursue them for the remaining balance of the loan.

A short sale is not a do-it-yourself deal. A real estate professional who is experienced in short sales is essential.

Short Sale—The Buyer

The first thing a buyer should know about short sales—they take forever. If your timeline is any shorter than three months, don’t even look at short sales.

Second, all-cash buyers are more likely to be approved. If you’re getting a mortgage on the home, you’ll need to be pre-approved and put up a significant amount of earnest money.

More issues buyers should be aware of:

  • Do your homework – What looks like a good deal may not be. A buyer needs to work with a real estate agent to know what home values are.
  • Watch out for low-ball lenders – Sometimes lenders will set a short sale price artificially low in order to attract bidders, and then they’ll jack up the price during the bidding process. Again, a real estate professional will help a buyer know what offer to make.
  • If you’re planning to buy or sell a home—short sale or otherwise—contact us as soon as possible!

Difference between a Short Sale and a Foreclosure

This is probably the most frequent question... What is the difference between a Short Sale and a Foreclosure? Well, this should help:

Short sales and foreclosures are two financial options available to homeowners who are behind on their mortgage payments, have a home that is underwater or both. The term short sale refers to the fact that the home is being sold for less than the balance remaining on the mortgage – for example, a person selling a home for $150,000 when there is still $175,000 remaining on the mortgage. A foreclosure is the act of the lender seizing the home after the borrower fails to make payments. This is the last option for the lender, since the home is used as collateral on the note.

There are different reasons for why a homeowner would opt for a short sale versus a foreclosure. The owner is forced to part with the home in both cases, but the timeline and other consequences are different in each situation.

Short Sale

Before the process can begin, the lender that holds the mortgage must sign off on the decision to execute a short sale. Additionally, the lender, typically a bank, needs documentation that explains why a short sale makes sense; after all, the lending institution could lose a lot of money in the process.

If approved for short sale, the buyer negotiates with the homeowner first and then seeks approval on the purchase from the bank second. It is important to note that no short sale may occur without lender approval.

Short sales tend to be lengthy and paperwork-intensive transactions, sometimes taking up to a full year to process. However, short sales are not as detrimental to a homeowner's credit rating as a foreclosure is. A homeowner who has gone through a short sale may, with certain restrictions, be eligible to purchase another home immediately.

Foreclosure

Unlike a short sale, foreclosures are initiated by lenders only. The lender moves against delinquent borrowers to force the sale of a home, hoping to make good on its initial investment of the mortgage. Also, unlike most short sales, many foreclosures take place when the homeowner has abandoned the home. If the occupants have not yet left the home, they are evicted by the lender in the foreclosure process.

Once the lender has access to the home, it orders its own appraisal and proceeds with trying to sell the home. Foreclosures do not normally take as long to complete as a short sale, because the lender is concerned with liquidating the asset quickly. Foreclosed homes may also be auctioned off at a "trustee sale," where buyers bid on homes in a public process.

In most circumstances, homeowners who experience foreclosure need to wait a minimum of five years to purchase another home. The foreclosure is kept on a person's credit report for seven years.

Some sections adapted from Realtor.com and Investopedia

© 2017 Sunset Business Brokers International LLC

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